PARIS: Air France-KLM suffered a decline of revenue in the third quarter of 2016 and started a new company to compete with the Gulf state airlines, the Franco-Dutch airline announced last week.
Revenue in the third quarter amounted to 6.938 billion euros (7.7 billion U.S. dollars), a decrease of 5.1 percent (down 4.1 percent like-for-like) compared to the 7.308 billion euros in the same period one year ago.
EBITDA in Q3 was 1.149 billion euros, compared to 1.323 million euros in the third quarter of 2015, a decrease of 174 million euros. The net result in the third quarter was 544 million euros, compared to 481 million euros in Q3 of 2015.
According to Air France-KLM, the high level of geopolitical and economic uncertainties, overcapacity in several markets, currency effects, fuel prices and ongoing concern about France as a destination affected the results and continue to put pressure on unit revenues.
Meanwhile, Jean-Marc Janaillac, CEO of Air France-KLM, revealed a new strategic project, called “Trust Together”, aimed to give the airline a better position on the global market. One of the nine priorities is to “regain the offensive in long haul” flights, with the creation of a new company as the most important measure.
The new company will, according to a press statement, constitute the “response to the Gulf state airlines which are developing at low production costs on key markets where Air France-KLM is pursuing its growth ambition.” The new company will fly from Charles de Gaulle Airport in Paris.
The name of the new company is Boost. “It will be focused on ultra competitive markets and will enable the group to go on the offensive by opening new routes, re-opening routes closed due to their lack of profitability, and maintaining routes under threat,” Air France-KLM stated in a press release.
“The status quo is not an option. We must launch a new dynamic to return to a leadership position in our markets,” said Janaillac, calling the project ambitious and realistic.
